How Domuso is Revolutionizing Rental Property Payments
When I started out as a multi-family housing investor, I wanted to focus on remodeling communities into healthy living environments for workforce populations.
During the last financial crisis, my cousin and I saw a major opportunity to buy distressed real estate. So, we teamed up and purchased our first single 4-plex apartment building and over the next 8 years, we built a multi-family real estate investment portfolio of over 6,500 units in five different states, valued in excess of $1 billion.
A large percentage of our residents paid via personal checks, cashier checks, or money orders. And our properties charged significant late fees by the 3rd of the month with eviction notices by the 5th of the month. We thought to ourselves, “these are families we are evicting because they just need a little more time to pay.” As I toured new assets across the country, I realized that this was a systematic problem in the industry affecting millions of renters.
That was our lightbulb moment: we realized that property managers were behaving like money managers. They’re issuing late notices and 5-day notices, hunting down payments, and dealing with rent always being due on the first of each month, even when a tenant doesn’t get paid until the 5th or later of each month.
But owner-operators lacked the right tools to manage payment risk, so they applied stringent due dates and asked for certified paper checks. Huge security deposits were required up front as protection and there was very little flexibility even for residents with perfect credit.
The rental industry reminds me of the car industry back in the 1940s and 1950s, where if you had to buy a car, you either paid cash, or you knew the dealer and he let you pay him off slowly, making payments every month.
Nowadays there’s a whole financial services vertical that manages car payments and car financing. It tells car buyers their terms, how much they can put down, how much they can pay each month, and when they can pay it. It works around what the buyers can do, but also gives the dealers what they need. Specialized financial services exist for healthcare, school, credit cards, and most other industry verticals, except for rent payments.
But there’s half a trillion dollars paid in rent every year.
This is when I decided to create Domuso, as a way to make life easier for owner-operators, which in turn makes life easier for renters.
We deliver a unified payment ecosystem by replacing the property’s current legacy payment provider. This allows Domuso to have access to every single renter living in that community. All rent for that community is processed via Domuso, and as a flexible payment option we can also directly extend consumer credit for any rent payment while the property receives its money up front.
For example, if you’re in California, you may have a $5,000 move-in payment, all paid in one lump sum. That includes first month’s rent, last month’s, and a security deposit. With Domuso, the move-in payment is done online and we can stretch out the move-in payment over installments, but still make sure the property receives its money up front.
We’re also giving property managers more payment tools, including automated online refunds. Many large companies have big departments whose job is to send a check in an envelope with a stamp. Domuso automates this electronic payment and sends notifications via text.
Domuso’s payment flexibility can also help eliminate late fees, which are a burden on people who have unusual or mistimed paychecks. For example, renters in some of my properties were constantly in eviction status and paid late fees every month simply because of the way their paychecks were scheduled. Other people have fluctuating income and paychecks, and can pay a few months up front because they won’t have income for several weeks. But with Domuso, they can pay their rent on time and avoid any late fees, which saves them more money in the long-run and gives them peace of mind.
I see a future where people need this type of delivery in the right, honest way that gives them the flexibility in a way that’s affordable and makes sense. I believe that Domuso will be the future of rent management. Our vision is to build the financial backbone that takes the management of payment risk off the owner-operators, and allows a modern financial system to manage that whole process.
How does Envestnet | Yodlee help make this work?
The Envestnet® | Yodlee® Data Aggregation Platform is a key part of our technology. We utilize Envestnet | Yodlee Account Verification API to check a consumer’s bank account balances and access transaction history, which are very important parts of our Risk Scoring and loan application process. We also certify funds and this allows residents to skip a bank trip to obtain a cashier check or money order.
We also recently graduated from the Envestnet | Yodlee Incubator, and completed our Demo Day presentation back in May, so we’re fully versed in the Envestnet | Yodlee “way” and well connected to its fintech ecosystem.
Domuso helps to deliver short-term credit on better terms to people who would never be issued credit, and this can only help rental owner-operators. To see how our flexible payment technology works, visit: https://domuso.com
For entrepreneurs and developers seeking to launch disruptive products that leverage transactional financial data, visit: https://www.yodlee.com/incubator